Inside govt’s insurance reforms push: Standardised rates, nationwide claims exchange in offing

The government is considering broad reforms to its health insurance sector, including standardised treatment rates and a nationwide claims exchange, as authorities seek to improve transparency and contain rapidly rising medical costs, Reuters reported, citing sources.

Medical inflation in India is estimated at around 12% to 14% annually, according to industry estimates. The sharp increase in healthcare expenses is putting greater pressure on households and encouraging policymakers to explore measures to standardise treatment prices and insurance coverage.

Panel to submit report by year-end

A panel comprising regulators, industry executives, hospitals and representatives of the Confederation of Indian Industry (CII) is expected to submit recommendations by the end of the year. The proposals would subsequently be considered for implementation, as per the report.

“The idea is to benchmark treatment rates, agreed between insurers and hospitals, to reduce disputes and fraudulent claims,” reported Reuters, quoting a source.

Industry estimates indicate that between 10% and 15% of health insurance claims could be unwarranted or fraudulent, highlighting the need for greater oversight and more efficient claims processing.

The panel is headed by the chief of the Insurance Regulatory and Development Authority of India (IRDAI).

India is also seeking to increase insurance penetration among its 1.4 billion people. Insurance spending currently accounts for less than 4% of gross domestic product, compared with a global average of more than 7%. The government has recently eased restrictions on foreign investment and changed distribution rules to support growth in the country’s $130 billion insurance industry.

More than 40 insurers, including joint ventures involving international groups such as Lombard, ERGO and AIG, operate in India’s health insurance market. These companies collected premiums of around 1.17 trillion rupees ($12.3 billion) during the fiscal year ended March 2025.

The push for reform comes as lawmakers have also called for government measures to make private healthcare more affordable. A parliamentary committee report last week showed that an average private hospital stay in India costs about $530, compared with approximately $70 at public healthcare facilities.

Standardised tariffs and greater transparency in hospital billing are being viewed as key tools to control healthcare cost inflation over the longer term.

Under the proposed reforms, insurers could be required to offer a common health insurance product alongside their existing policies. The product would seek to establish standard coverage and pricing for a range of medical conditions and procedures.

Uniform list of eligible treatments

The proposed framework could also introduce a uniform list of eligible treatments, making it easier for policyholders to understand what their insurance covers.

At present, substantial differences in premiums, coverage and treatment rates among insurers often encourage customers to switch policies in search of more favourable terms.

The panel is also expected to encourage broader use of the National Health Claims Exchange, a platform developed jointly by India’s health ministry and insurance regulator. The system would provide hospitals and insurers with a standardised mechanism for exchanging claims and billing information.

By creating a common data format, the exchange could speed up claims verification and settlement while improving visibility into healthcare prices, potentially helping authorities address some of the factors driving medical inflation.